KATHMANDU, JAN 17 – The Finance Ministry has proposed scrapping two state-owned companies National Trading Limited and Nepal Railway Company, with the government increasingly feeling that public enterprises (PEs) have become a financial burden.
The ministry has been discussing its plan to take the loss-making firms off life support with the related ministries, Commerce and Supplies and Physical Infrastructure and Transport.
National Trading and Nepal Railway with 340 and 25 employees respectively have been surviving on state handouts as they have hardly been able to make any money.
Chief of the PE Coordination Division at the Finance Ministry Ram Sharan Pudasaini said they had written to the Commerce and Supplies Ministry on Friday for its go-ahead to scrap National Trading. They had informed the Physical Planning Ministry three months ago about putting an end to Nepal Railway.
“In our letter, we have explained that the existence of National Trading is no more required as the private sector has been performing all the tasks it was established to do,” he added.
National Trading had run up losses amounting to Rs 83.4 million as of the fiscal year 2012-13, and they were expected to have ballooned to Rs 151 million in the last fiscal year.
Meanwhile, Nepal Railway’s dissolution has stalled as the government is yet to settle issues related to paying off the permanent employees.
The company operates Nepal’s one and only Janakpur Railway. Tulasi Prasad Sitaula, secretary at the Physical Infrastructure Ministry, said the ministry has given go ahead to the company’s dissolution, but the task of paying off the permanent staff has remained. “Temporary employees have already been removed,” he siad.
The Finance Ministry decided that the time had come to shut down National Trading after it asked to borrow Rs 1 billion to repay bank loans, boost running capital and pay administrative expenses. Around Rs 500 million of the loan is intended to be used to repay debts.
According to Pudasaini, the ministry is willing to lend money to National Trading if it puts up its land as collateral. The company’s revenues have dropped as it has been doing little business , and most of its little income comes from rentals and operating gasoline stations.
Although National Trading is a public enterprise independent of state control and is supposed to be self-sustaining, it has been asking the government to bail it out. Pudasaini said that National Trading had spent the Rs 50 million the ministry gave it to buy sugar on other things.
Meanwhile, an employee union at the company has proposed to the Finance Ministry to launch a voluntary retirement scheme (VRS). “We have told them to come up with a plan to scrap the company itself instead of the VRS,” Pudasaini said.